Dushkina Yuliya
CASE INCIDENT 7.1 “First in the Market”
SITUATION ANALYSIS:
Juan Peron is a process engineer employed by Vantage Engineering, Inc., and
assigned to the research laboratory in the Advanced Products Division (APD). Vantage
is a well-established manufacturer of a military hardware. APD's general purpose is to
conduct research to improve the company's military hardware products. However, the
laboratory director was recently given permission to develop spin-off products for
possible sale on the open market. At the end of the year Juan was put in charge of a
special project to research a chemically processed wood for specialty applications.
Simultaneously, a minor reorganization occurred, placing Juan and his project under the
direction of Greg Waites, a close friend of Juan's. Both of them soon began to promote
their product traveling nationally and discussing the product with potentional customers.
Juan saw the opportunity of good profit and assured Greg to build the pilot plant for
producing their products without waiting for the completing the performance tests. Three
employees were hired to work on the plant. Due to a workload reduction in t Electronics
Division of Vantage, those employees had taken the laborer jobs to avoid being laid off.
Juan intended to personally direct the technical operations a thus saw no need to
establish job descriptions for the positions. A month after they received an order for
70,000 bow handles from a major producer of archery bows. Juan knew that if they
accepted the order, the first year of operations would be guaranteed to be in the black,
however, he persuaded Greg to sign the contract. A crash program was established at
the plant to get the order out on time. One month after the final shipment of handles had
been made, Juan hired a junior engineer, Libby Adams, to conduct the performance
experiments that had been disbanded while the plant was getting the rush order out.
Libby examined some of the experimental handles and discovered hairlines cracks at
various stress points that had not appeared during the initial examination. She
immediately went to Juan's office to inform him of the problem and found Juan and Greg
sitting there with a telegram from the archery company. It stated that several retail
merchants had returned bows with hairline cracks in the handles and that the archery
company would seek a settlement for its entire investment in the handles. Vantage paid
the settlement and subsequently canceled the wood project.
ISSUES/FACTORS:
The main problem is that Juan was almost completely concentrated on the promoting of
the new product; at the same time he neglected the development of the product. He
didn't finish preliminary testing; he hired unqualified personal and even didn't establish
job descriptions. Neglecting the development stage of the new product was his biggest
mistake. Juan took the big and rush order, however, he hadn't not only completed
performance testing, but also he hired unqualified people and didn't organize producing
of the new product in a proper way. Juan didn't realize that both the product and the
pilot plant needed development and improvement before taking any order.
STRATEGIES/RECOMMENDATIONS:
First, before taking any further step, Juan should complete the performance tests in
order to make sure that the new product has a good quality. In future it would help him
to avoid a lot of problems with customers.
Secondly, he should hire qualified specialists for the pilot plant and appoint experienced
manager(s). As we all know, qualified and proper organized staff is critically important in
production of any product, especially of the new one.
Finally, he should improve the production facilities of the pilot plant. In order to deal
successfully with a big order, he should enlarge the space of the plant, install extra
equipment and make another necessary reorganization.
ANSWERING THE SPECIFIC QUESTIONS:
1. What caused the wood project to fail?
The main reason is that Juan neglected the development stage of the new product - he
didn't consider it important to complete the performance tests.
2. Would a more effective strategy on the part of Juan and Greg have helped ensure the
success of the project?
I think, it would have helped. Much more attention should be paid to the development of the
new product and organizing of its production.
3. At what stage of the strategic management process did the breakdown occur?
The breakdown occurred at the formulation stage of the strategic management because
there was no careful planning? No analysis of current situation was performed. The only
thing that Juan and Greg saw was quick profit. Everything was doing in rush.
4. What general observations can be made to prevent such a situation from occurring
again?
I think careful planning should be done before starting any new project. The mission should
be identified. Long run and short-term objectives must be set. Strategic alternatives should
be developed and carefully analyzed before taking any actions. That would be ensuring to
prevent such situation like this from occurring again.
CONCLUSION:
This situation shows us very well, that the role of the strategic management is critically
important in reaching successful results in business. Neglecting of the strategic
management can result in failure and sufficient money loss like in case with wood project
when the Vantage had to pay the entire settlement.